Invest To Win
It is important for a CEO and the Board to make investments that will generate competitive returns. Not a regulator’s definition of “fair” returns…or a competitor’s idea of “reasonable” returns…or a pundit’s “commercial” returns. If shareholders cannot earn competitive returns – returns that can be leveraged by a company’s position in a competitive environment – they will invest their money somewhere else.
Winning can be measured in many ways – but I have always focused on four key areas:
- Winning for shareholders, including competitive returns measured by total shareholder return;
- Winning customers, indicated by metrics such as increased market share;
- Winning financials, especially growing revenues, EBITDA and free cash flow; and
- Winning the loyalty and commitment of employees at every level, measured by everything from recruitment and retention indicators to independent and periodic assessments of employee satisfaction.
Some of the ways to achieve a competitive edge include:
- Seek premium prices for truly differentiated premium products and services – as we did at Telstra with our world-leading NextG™ mobile Internet.
- Employ value-based pricing where you provide value-added service in the form of bigger, better, faster, simpler, more integrated, more timely, more accessible, more useful and where the customer is willing to pay more for value.
- Be quick to evaluate base prices as the competitive environment changes owing to new entrants, new technologies, changing consumer preferences, or other factors.
- Establish a culture that encourages and rewards initiative and innovation by employees at every level – including formal training, formal and informal coaching, on-the-job mentoring on a continuing basis and pay-for-performance.